GT Bank Plc, a Nigerian first tier lender, sustained its efficiency leadership in the first half of 2020 recording the least costs to income ratio , a yardstick of efficiency..
The bank recorded a 43 % cost to income ratio followed by Stanbic IBTC bank with 45.2 % while Zenith Bank came third with 54.2 %. The above banks were followed by the United Bank for Africa Plc and Access Bank Plc with their cost to income ratios berthing at 60 % . However, in the same analysis ,three banks of the 13 banks listed on the Nigerian Stock Exchange had their Cost to Income ratios flashing red above 80 %. These include Sterling, Unity and Wema Banks ;others equally battled with high cost to income above 70 % in the same period .
GT Bank and UBN were the two banks that reported the lowest cost-to-income ratio for the year ended December 2019, they recorded cost-to-income ratios of 36.11% and 42.6% respectively.
GT Bank did not lead in the cost to income alone ,it led the pack in the other two metrics of efficiency. Its return on equity , a metric used to measure return to shareholders with 13 percent in the first half of 2020. The fact is that you can post the largest profit but what that translates to in terms of equity capital is more important.
Also , in terms of how a bank is able to run efficiently,converting its assets to profit and using all its resources to generate for profit for its shareholders , GT Bank still topped the table at 2.1 percent .This was far ahead of the next bank on the table with 1.4 percent. Incidentally, it had N4.5 trillion assets based compared to other first tier banks who assets were above N7trillion .
Over the past three years GT Bank, Zenith Bank, and UBN have consistently reported low CIR relative to other banks, with GT Bank consistently recording the lowest CIR among the three big money centre institutions. GT Bank recorded a decline in its CIR to 36.11% in 2019 from 37.09% in 2018 which was as a result of repricing of time deposits, sustained low cost deposit mix, continuous customer acquisition drive and a retail strategy anchored on focused digital solutions to support a low cost deposit drive.
Zenith Bank recorded a decline in its CIR to 48.8% in 2019 from 49.3% in 2018, part of the strategy it adopted was effective deposit mobilization at the retail end of the market to lend to corporate clients, leveraging the bank’s strong digital platform and emerging technologies
Low yields environment ,regulatory authorities policies slashing fees and commissions as well as economic headwinds compounded by corona virus pandemic have continued to put banks bottom lines under big pressure. The consequences of the recent Coronavirus outbreak have made the search for efficiency even more pressing as banks review growth strategies